Cotton Halts, Waits For Fed

After ripping higher Tuesday on strong volume, the cotton market is slacking off Wednesday morning as traders await the Fed’s 2 p.m. EDT announcement. Additionally, the market wants to see Thursday’s export sales and the outcome of the Trump/Xi phone call on Friday. 

The Federal Reserve will announce its interest rate decision today at 2 p.m. EDT, followed by a question and answer session with Fed Chairmain Jerome Powell. Odds are calling for a quarter-point cut, but some think there could be a half-point reduction.

President Trump indicated he will talk to China’s President Xi on Friday regarding trade. The success of the Madrid talks has enabled the possibility of a face-to-face meeting sometime in October.

USDA will issue its weekly export sales on Thursday. Last week saw net sales of 129,000 off 47%, and shipments of 130,000 bales, down 16%. However, China and India were in the business mix.

Tuesday’s up move in ICE cotton was technically encouraging in that the futures closed over the 50-day average, and are hovering just below the 100-day average. With certain speculatores heavily net-short, challenging such indicators may cause some bearish traders to rethink their stances. 

Daily chart support for December cotton stands at 67.10 and 66.45 cents, with resistance at 68.00 and 68.50 cents. Wednesday morning’s estimated volume is 6,845 contracts.

Keith Brown can be reached at commodityconsults@gmail.comor by calling (229) 890-7780.